The Department of Justice filed a statement of interest in the court case challenging the merger between Paramount Skydance and Warner Bros. Discovery, arguing the states suing to block the transaction should post a “proper bond” if they’re confident in their antitrust lawsuit.
Paramount is asking a federal judge in California to require the plaintiffs to post a $1.88 billion bond that would cover the entertainment company’s financial losses stemming from the blocked merger, should the defendant win the case. Paramount cites the bond requirement under Section 16 of the Clayton Act as the basis for its argument. The 12-state coalition, led by California, says it should be on the hook only for a “nominal bond” worth $10,000 at most.
Associate Attorney General Stanley Woodward Jr. disagreed with the plaintiffs, saying the bond “must be more than merely nominal” if one is granted by the judge.
“In addition to arguing against any bond requirement at all,” Woodward wrote in a court filing on Tuesday, “Plaintiff States argue that if Section 16 does require one, the requirement applies only if the court determines that a preliminary injunction was ‘improvidently granted,’ and—even then—it provides only for a nominal amount. None of that is correct.”
“That reading, if followed, would have the effect of both nullifying the plain text of the statute (leading to separation-of-power concerns) and disregarding Congress’s enforcement scheme by elevating States to a status akin to the federal government,” he said.
Furthermore, Woodward argued only the DOJ and the Federal Trade Commission “can obtain a preliminary injunction in a merger case without posting a bond.” The same cannot be said for states, according to the DOJ.
The Clayton Act specifies that plaintiffs must execute a proper bond before a preliminary injunction is issued under Section 16 to protect defendants from damages if the injunction is wrongfully granted. No injunction has been issued in the Paramount-Warner Bros. merger case.
The DOJ did not say what a proper bond amount would look like.
The department’s statement of interest is the Trump administration’s latest move in support of the $111 billion merger.
In June, the DOJ concluded the “transaction is not likely to result in harm to competition or American consumers” in several key markets. That came one month before California Attorney General Rob Bonta and 11 other Democratic state attorneys general filed their lawsuit.
The case is heading toward a March 2027 trial date unless a settlement can be negotiated before then. A two-day settlement conference was scheduled for Oct. 14 and 15. The meeting is required for both sides heading to trial and doesn’t mean there has been any substantial progress on a negotiated settlement.
The settlement conference will arrive two weeks after Oct. 1, when Paramount starts racking up a $7 million-per-day ticking fee that remains in effect until the merger is closed. That is also the earliest date for when Paramount could announce it is relocating from California to another state amid the legal battle.
PARAMOUNT’S RELOCATION TO RESULT IN $10 BILLION TO $20 BILLION ECONOMIC LOSS IN CALIFORNIA: REPORT
In the meantime, a court hearing on Paramount’s requested $1.88 billion bond is scheduled for Sept. 24. It’s unlikely a bond of that massive amount will be granted, considering the judge rejected Paramount’s bond request earlier in the case. At least, that’s the view held by antitrust lawyer and former California Deputy Attorney General Abiel Garcia.
“The idea that you’re going to force a government who’s exercising its police power as an authority to enforce the laws for the public good to put up a bond … I don’t know of any case that’s really done that,” Garcia told the Washington Examiner.